In an age when shares can be purchased at the click of a mouse, filling a life insurance proposal continues to be a major chore. More often that not it is the insurance agent who, in his eagerness to sell, fills in the details on behalf of the insured.What the proposer doesn’t realise is that such a casual approach can make a crucial difference when it comes to pricing, and in ensuring that claims are not prejudiced. Unlike other transactions, insurance is based on faith. Since the insurance company cannot verify every bit of information, it accepts in good faith whatever details the proposer provides. The flip side is that this gives the company the right to reject claims if there is non-disclosure of a fact that is material to the pricing of premium.
If there is a vague or incomplete entry in the proposal, the underwriter may play it safe and bracket the insured in a higher risk category. This is more applicable in case of policies where there is a high sum insured.
Taking a little more trouble in filling the proposal form can, however, help the insured save premium money. Here are some disclosures that make a difference in price:
Age proof
Proposers may be tempted to give a self-declaration, in the absence of certificates. take this route when their age certificates are not readily available. However, it makes more sense to make available photocopies of birth certificates, passports or school leaving certificates, especially if you are above 40 years of age. The underwriter may raise the premium to accommodate the possibility of the applicant being older than the declared age. Sometimes, the increase can lead to a premium payable for a life five years older than that for the declared age.
Income
Indians often fight shy of disclosing their full income. But there is a legitimate reason for an insurance company to seek the proposers’ income, particularly if the proposer is seeking a high sum insured. Insurance companies usually accept the sum insured as a multiple of present income. Under-declaring income could result in the company declining the proposal for a high sum insured.
Occupation
It’s best if the occupation is not left vague. For instance, when you mention your occupation as ‘engineer’ with ABC Construction, the underwriter wants to know if you are a design engineer or a site engineer or an IT engineer maintaining the company’s systems. Do mention if you toil in an environment with high safety norms. This reduces premium hike on the grounds of “occupational extra.”
Medical history
Here again, most applicants are reluctant to share information, and agents misguide proposers by asking them not to declare some medical procedures.
The information, however, need not increase your premium. If a claim has arisen out of any pre-existing condition not disclosed in the proposal form, the insurer has a ground not to pay it.
Family history
Being clear on this front works in your favour if the family is seen enjoying higher life expectancy with good health. It makes a stronger case for cover at a higher age.
Other details
List all the life insurance policies you have. Give details of the cover you enjoy under those policies along with the policy numbers, name of the insurer, sum assured and the date on which the policy started. If you have bought a policy from the same insurer at a standard rate in the recent past, you may get a favourable underwriting treatment.
A lethargic attitude here can deprive you of better underwriting treatment. Mention the reasons behind the purchase of life insurance. If you don’t have any insurance and are going in for a large sum assured due to a fresh home loan, mention it. Employment, wedding and child birth and are some valid grounds. Because accidents could happen, like when you are travelling to Central America to examine statue on Gods of Aztec.
If the proposer does not mention the surgery details in the proposal form and this is detected subsequently, the underwriter will turn cautious about the life to be insured. Even if an additional test is called for, you stand to benefit from it, as you come to know about hidden problems, if any.
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